“The queer personality and floating mind”: what did Keynes say to and about Roosevelt?

by Eric on June 17, 2013

John Maynard Keynes met Franklin Roosevelt on Monday, May 28, 1934. Both afterward said polite things to Felix Frankfurter, who had urged the two to confer: Keynes described the conversation was “fascinating and illuminating,” while Roosevelt wrote that “I had a grand talk and liked him immensely.”

But the best-known account is probably that of Secretary of Labor Frances Perkins, who wrote in her memoir, The Roosevelt I Knew,

Roosevelt told me afterward, “I saw your friend Keynes. He left a whole rigmarole of figures. He must be a mathematician rather than a political economist.”

It was true that Keynes had delivered himself of a mathematical approach to the problems of national income, public and private expenditure, purchasing power, and the fine points of his formula. Coming to my office after his interview with Roosevelt, Keynes repeated his admiration for the actions Roosevelt had taken, but said cautiously that he had “supposed the President was more literate, economically speaking.” He pointed out once more that a dollar spent on relief by the government was a dollar given to the grocer, by the grocer to the wholesaler, and by the wholesaler to the farmer, in payment of supplies. With one dollar paid out for relief or public works or anything else, you have created four dollars’ worth of national income.

I wish he had been as concrete when he talked to Roosevelt, instead of treating him as though he belonged to the higher echelons of economic knowledge.

In Perkins’s story, Roosevelt did not grasp economic theory, and would have done better with a less figure-laden account of Keynes’s prescriptions. Historians often recycle her description as evidence of Roosevelt’s “limited understanding of some of the matters he had to deal with as president,” as Adam Cohen writes.

And yet we have evidence that Roosevelt was quite happy dealing with economic theory and a rigmarole of figures.

Consider Roosevelt’s press conference of August 9, 1933, at Hyde Park, where he had recently seen Irving Fisher, George Warren, and other advisers who left him with a sheaf of charts and tables.

When reporters asked what had happened to prices, the president responded, “That is a perfect question,” shuffled some papers until he found the ones he wanted, and proceeded to conduct a brief seminar. “Now the price of gold has gone up,” he began, pointing at the appropriate line. “Seventeen basic commodities were away below the all-commodity level and they have gone up away above the all-commodity level,” he continued, indicating the effect of recent shifts. “Farm prices were lowest of all and they have come back, relatively, more than the all-commodity level.” Other prices were stickier. “[R]etail food prices went down very little and they have gone up very little. And the cost of distributing food was always very, very high and hardly went down at all.… The cost of living, of course, didn’t go down very much and it hasn’t gone up very much.… Then, over here, we have the four main farm crops [cotton, corn, wheat, and hogs] and that shows what must be perfectly obvious, that the things that went down the furthest came back the most.”

None of that sounds like a man generally grumpy about having to discuss the theory or specifics of economic activity and its implication for policy. So how do we explain what he said to Perkins?

It is of course possible that Roosevelt was fibbing about the extent to which he had failed to understand Keynes – he had, by his own acknowledgment, done just that in 1933, when reporters asked him if Irving Fisher’s commodity dollar had influenced his thinking. Roosevelt lied, pretending he did not know what they were talking about, to throw them “off the scent.”

It is also possible that Perkins did not remember substantially what the president said – hers is after all an after-the-fact account.

But let’s suppose the president did find the meeting off-putting. Isn’t it possible that he was annoyed not by the fact of the figures, but of the specifics – isn’t it possible that’s what he meant by saying Keynes was a mathematician rather than a political economist?

After all, Roosevelt’s policy accorded with Keynes’s prescriptions in the 1933 Means to Prosperity: repairing the banks, devaluing the currency, and using a public works program to provide impetus for private borrowing and business expansion.

Or rather, it accorded with Keynes’s prescriptions in every respect except that of scale – Keynes had written the Means that a public works program “probably has to be on a large scale and organized with determination.” Roosevelt’s idea of the appropriate scale was not so large as Keynes’s. On April 19, 1933, Roosevelt told reporters, “entirely off the record, do not write stories about five or six billion dollars of public works. That is wild.”

But when Keynes met Roosevelt just over a year later, he was about to say publicly that while he figured the US had commendably spent about $2.8 billion on recovery and relief since Roosevelt’s presidency began, this spending was now unfortunately on the wane. Keynes would declare the US government needed to spend about $2.4 billion over the next six months – or enough to raise the total into the $5 to 6 billion range that Roosevelt had rejected as “wild.” Keynes would publish this argument in an open letter to the president that appeared in the June 10, 1934, New York Times.1

So it seems quite likely to me that Roosevelt was cross after meeting Keynes not because the president did not understand the economist’s figures, but because he did – because what was mathematically required was not politically plausible.2

As for Keynes, he had staunchly defended the New Deal through 1933, and continued to do so into 1934, though he now had thoughtful reflections on Roosevelt’s personality to add. Back in England after his American sojourn, he spoke in a forum at the Tuesday Club on July 4, 1934 regarding the New Deal. He acidly noted that “this so-called ‘Bolshevik’ administration has saved the capital financial structure.” He remarked that US output was now 20 to 30 percent above its low and observed, “the extent, variety and spread of the recovery is outstanding in economic history.” He critiqued the new bureaucracy but said “Far from harping on its shortcomings, it is rather a miracle that it has not been frightfully bad.” Then he observed, without really analyzing, “And over it all and on top of it is the queer personality of the President, with his sensitive apprehension and floating mind.”

Keynes concluded, “The whole difficulty that confronts this liberal Administration is a world problem: can liberalism and democracy last out, – that is the problem everywhere. Most American business leaders lack imagination and have no apprehension of the problem facing their society, if it is to survive. I want to see a compromise between the old and the new – only the United States is bold and hopeful and has already made a great start toward solving the world problem in liberal terms.”

1I’m not sure exactly where Keynes got his figures, or what categories of spending they include. He says “emergency expenditure” – “excluding refinancing and advances to banks” – was $90 million up to November 1933. He says that “[f]rom November onward, the figure rose sharply and, for the first four months of this year, the month average exceeded $300,000,000.” So figuring a monotonic rise up to around $300 million, and then a falling off into June, that gives us a total expenditure of around $2.8 billion up through June 1934. The Treasury’s annual report for the fiscal year ending June 30, 1935, gives public works and relief spending from July 1, 1933 to June 30, 1934, at $2.5 billion; if you add in $270 million for Apr-May-June, that gives you $2.77 billion, so that’s quite close to my estimate of Keynes’s estimate.2The same Treasury report gives public works and relief spending from July 1, 1934 to June 30, 1935, at about $3.4 billion, or $283 million per month. So Roosevelt did not then implement Keynes’s prescription.

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Thank you for once again rescuing FDR from hackery posing as history. You are spot on that FDR’s comment was about the political acumen of Keynes and not that FDR didn’t know how to read anything with math in it. FDR’s comment is akin to Sam Rayburn talking to LBJ about the JFK New Frontier guys, saying he wished one of them had run for sheriff.

FDR would manage something truly extraordinary during a prolonged depression: he got wages to rise. In the other great depressions, following the Panics of 1837, 1873 and 1893, real wages fell. From the General Theory (1936), it may be surmised that Keynes, himself, was not altogether clear that this was the normal pattern in business cycles, though he would argue forcibly that a fall in nominal wages would not prove a remedy.

The urgency of sectoral reform and regulation is also something, which Keynes did not feel. (Maybe, that’s his “liberal” idea?) Much of the activity of the New Deal would center on particular sectors: electricity generation and distribution; agricultural prices, production, and the dust bowl; and, of course, reform of banking and the financial sector. If Mr. Keynes’s interest in economics had extended to the problems of these sectors, he and FDR might have more to talk about.

“None of that sounds like a man generally grumpy about having to discuss the theory or specifics of economic activity and its implication for policy.”

I agree that none of that sounds like a man grumpy about having to discuss the specifics of economic activity, but it doesn’t seem to show any evidence in theory, apart from maybe the bit about retail food prices being sticky while the four main farm crops both fell and rose the fastest.

Recognizing that the prices of these commodities are important for the well-being of the people, and are shaped by economic conditions, is quite different from understanding the theory of multipliers, which shows that moderately large government interventions can actually achieve far more than one might initially think on these very prices.

I don’t really see that there is any obvious reason why Perkins’s memory of events or interpretation should be doubted. The accounts she got of the meeting from Roosevelt and Keynes appear to cohere perfectly and clearly suggest that Roosevelt was out of his depth. Keynes had assumed he had a more mathematically sophisticated grasp of the subject than he in fact did. And Roosevelt recognized this (and seemed to show some embarrassment about it).

And the press conference story about prices and graphs is perfectly compatible with this interpretation. Roosevelt clearly wants to be seen as having a sophisticated mathematical understanding – but he was only lecturing reporters here.

Of course, it’s possible that Roosevelt only pretended not to understand Keynes’s theorizing (because he saw the prescriptions as politically impractical). But this seems to be drawing a long bow.

Doesn’t it seem more likely that he was both out of his depth on the theory side and opposed to some of the specifics of Keynes’s suggestions (for political reasons)?

Well…John Maynard Keynes was was trained as a mathematician, after all. He received first-class honours (but was only 12th Wrangler) in Mathematics at the University of Cambridge, and did a fellowship dissertation under Bertrand Russell and Alfred North Whitehead – two of Britain’s most prominent mathematicians at the time. The manuscript he worked on in the time period of 1907-1908 would later become A Treatise on Probability, which was delayed for publication due to the First World War. For more insight on Keynes’s mathematical capacity, please see this article published in History of Economic Ideas, Volume XX, 2012, Issue 3.

How does Keynes’ letter to FDR in 12/33 (?) fit into this interpretation? Didn’t Keynes think Roosevelt had lost sight of political constraints and caution FDR to put recovery measures before reform measures?

Perkins was perfectly capable of distinguishing what would have been off-putting, in Roosevelt’s camp, etc. — seems unlike her to not be right about this particular episode. She was very attentive to making things user friendly for politicians (and making sure that the user friendliness locked in the things she wanted them to do) so it may be embellished to reinforce that point, but I doubt it.

This anecdote tells us that Perkins feared Roosevelt had not understood what Kenyes was saying, not that he didn’t understand. We have no way of knowing whether he did or not. It seems like there is a bit of over-analysis going on here. Isn’t it possible that FDR was simply being self-deprecating when talking to Perkins and rather than engaging in calculated deception. Perhaps, too, he needed more time to consider the implications of what Keynes had said, before committing himself by pronouncing on it. In any case, “equivocating” might be a more accurate and appropriate term to use than “lying.”

I don’t have time right now to find and quote the relevant passage, but Geoffrey Ward in Before the Trumpet, his book about FDR’s early years, writes that FDR as a student had no taste for theory or abstraction and that that remained true for the rest of his life. Of course, that does not mean FDR did not understand Keynes — Roosevelt might very well have understood him. On the basis of the OP, as Harold notes, it’s hard to say for sure.

As for the phrase “political economist” — still in use today, of course, but possibly more common in the ’30s than it is now — this is a phrase that FDR would have long been familiar with, presumably; again though, it’s hard to say, on the basis simply of Perkins’ story, exactly how he was using the phrase in this context.

P.s. I’m sure someone (not me) could write a whole treatise on “political economist,” but when I hear the phrase today I take it to mean someone who studies political economy, which of course is what economics was called well into the 19th cent. if not beyond. Today, economics is just called economics and “political economy” usually refers to a particular set of problems and concerns that some economists (and others) are interested in.

“Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance, than an increase, of balancing the Budget”

Also pg 13-16? I don’t know if there is any proto-Lafferism in there, kinda looks like it

There ya go. And FDR wouldn’t likely be thrilled to come out publicly and say “Keynes told me to cut taxes.” I doubt FDR would be receptive to proto-Lafferism in 1933, and likely as confused by it as I am today. Thank goodness he didn’t listen, and Western Civilization was saved. For a while.

It would be a remarkable challenge for any historian to give a representative account of what people in 1934 believed to be the “cause” of the Great Depression, or the best “remedy”. There were a cacophony of voices to be heard, and FDR’s own announced position was an agnostic’s willingness to experiment, which allowed him to give permission to many, disparate efforts at relief and reform, and to revise and retry major programs as they encountered practical, legal and political obstacles. It would not have been politically advantageous to the President to commit himself, even in his own mind, to a singular diagnosis and prescription, when no single diagnosis or prescription commanded the attention, let alone the assent of a political majority.

If FDR had personal inclinations, they may very well have been well-modeled by his Treasury Secretary, Henry Morgenthau, Jr., who was very skeptical of deficit spending as a remedy. FDR differed from Morgenthau, however, in the critical respect that FDR was not doctrinaire, and, therefore, free as a politician, to endorse, revise and abandon a variety of approaches and reforms, as circumstances seemed to warrant.

Keynes enjoyed unequaled prestige in his own day, and is the only economist of the 193os, whose name, today, is universally remembered. His doctrine founded a new branch of economics. We shouldn’t imagine, however, that he was simply and entirely “right”, and in the position of bringing light onto the heathen. If his arguments most often did not persuade, he might bear some responsibility. And, in 1934, he was still in the midst of discovering his own doctrine, or, at least, its imperfect rationalization. Keynes had been the established advocate of spending on public works as a relief measure and an opponent of deflationary policies and the gold standard for many years — Winston Churchill’s insistence that Britain start the Great Depression early gave Keynes the opportunity to pioneer in its diagnosis and prescription — but his rationalizations and justifications, evolved.

It is often argued that the spending of WWII cured the Great Depression in a way that fully vindicated Keynes, but WWII made politically feasible a combination of policies and policy effects not clearly anticipated by Keynes: it enabled the Great Compression of income distribution, it distributed the war debt throughout the population more than curing the debt-deflation problems of the 1930s, and it stimulated migration. And, it did so, against a background of New Deal reforms of the banking and financial system, labor and union rights, farm economics, public utility regulation, social insurance, etc. Keynes’ General Theory (1936) fell well short of anticipating or rationalizing the full detail of the subsequent, actual events, being ambivalent and ambiguous on income distribution and muddled on details of monetary and financial function.

Perkins focuses on Keynes’s argument for a multiplier. Such an argument, I would think, would have been recognized by FDR as a species of his own “pump-priming” argument in favor of public works spending, which he was already undertaking on a large scale, where “large” is measured against an historical precedent. What Keynes needed to establish as plausible and intuitive was the necessary scale of such efforts, so as to put aside the standard of historical precedent, which so alarmed contemporaries. Was he attempting to do this with reams of arithmetic?

It seems to me that nonchalantly throwing around verbs like “fibbing” and “lying” might be buying into right-wing framework for talking about Roosevelt’s alleged duplicity. I am not a historian, but what I have read suggests that when historians examined the archives they were surprised to find so little disconnect or contradiction between what Roosevelt expressed publicly and what was recorded in his private papers private papers and correspondence.

Harold, bless you, I’m pretty sure you’re the only one who thinks I buy into the right-wing framework of interpreting Roosevelt or the New Deal. The phrase “I threw them off the scent” is Roosevelt’s own description of what he was doing when he told reporters, “I haven’t the faintest idea; I don’t know” about Fisher’s theory of the commodity dollar, when he did. There’s surely some deception there. If you don’t like “fibbing,” maybe “dissembling” would suit you. But Roosevelt wasn’t acting as if he were under oath, either. And he did sometimes flat lie, as in the case of Yalta; see Eric Alterman.

That’s not at all to disagree with you on your general point, that Roosevelt did on balance say what he thought (if in cagey ways). But it also points to the peril of using a generalized character trait to interpret specific occasions. So, for example, while Geoffrey Ward may well be right that in general Roosevelt was averse to the abstract and theoretical, that doesn’t tell us definitively what he was doing or thinking on this specific occasion.

And LFC, I’m aware of the phrase “political economist.” It’s possible that because Perkins was aware of it too, she did not precisely remember Roosevelt’s wording or emphasis, twelve years on.

Perkins herself describes her book more as “source material” than as interpretation.

Finally, I do think that historians have a generalized President Roosevelt problem. That is to say, it’s accepted to believe that John Adams, Thomas Jefferson, and Woodrow Wilson were smarter than most politicians and possibly even smarter than most historians. But it’s not accepted to think that about either President Roosevelt – in Theodore’s case, because he was so belligerent and such a cartoon of himself, and in Franklin’s case, because he was so capable of bland geniality. I am sure that in both cases, it’s perilous to suppose that what’s on the surface is a window into what’s underneath. I know that even people close to Roosevelt made this mistake repeatedly – James Warburg and Raymond Moley, particularly. – and it’s unfortunate that they’re among the principal primary sources we have on the early New Deal.

Eric:So, for example, while Geoffrey Ward may well be right that in general Roosevelt was averse to the abstract and theoretical, that doesn’t tell us definitively what he was doing or thinking on this specific occasion.

I agree.
Fwiw and for those who haven’t read it, Before the Trumpet (which I’ve dipped into, not read straight through) is a mix of very engaging social history and judicious psychological speculation; the chapter on FDR at Groton is a gem and ends w a great story about FDR’s return to the school as President. (Too long to detail here.) I haven’t read Ward’s sequel, A First-Class Temperament.

I cannot be “the only one who thinks” Eric Rauchway “buys into the right-wing framework of interpreting Roosevelt or the New Deal” much less “aiding and abetting” such a narrative, because I have no idea what Eric Rauchway thinks (apart from his expressed opinion in the Oxford guide to the Great Depression that Henry Wallace was a poor secretary of agriculture). Also, I am not au-courant with right-wing historiography. I merely said that it sounds like a careless use of words.

It sounds like Rauchway does think Roosevelt was duplicitous about Yalta. I did read Historian Fraser J. Harbutt’s account of Yalta, as it happens.

I actually don’t have or recall having a firm opinion on Wallace as Secretary of Agriculture, so it would surprise me if I expressed one. (Though several of the primary sources I’ve been looking at lately don’t think much of him.) But it’s been a while since I wrote the book. Certainly I do know I tried to convey the perceived shortcomings of the AAA.

Thanks, Eric, for including the pointer to Gary North’s article, which does indeed give a relatively “fair and balanced” account of this meeting, with good context. Nice to see that not everybody on the political Right is a hack. They do, however, need constant reminding that saying “World War II ended the Great Depression, not the New Deal” is only another way of saying that WW-2 was, like, the Greatest Stimulus Package Ever.

Two serious points are worth making with regard to FDR’s politics. First, that he presided over a body politic far more active than our own: there was a higher degree of distributed political activity — people belonged — and institutions were more aware and jealous of their independent powers: the States and cities, the Congress and the Courts. So, yes, a vigorous union movement was at work. Second, unions are weak, weaker even with numbers, than the business firms they purpose to negotiate with, and unions are never weaker than when unemployment is high and substitute labor plentifully available. Unions need a benign attitude in the civil authority to succeed. The hostility of previous Democratic Presidents — Grover Cleveland and Woodrow Wilson — had struck significant blows against the hopes of organized labor (even when Wilson acted within wartime control of the economy to raise wages).

Eric @ 16 linked to Gary North’s take on the Perkins anecdote. The Right has its story straight, and it is that the Great Depression was “worsened” and prolonged by a perverse refusal to embrace deflation and the reduction of wages. The consensus of the economics profession largely supports that intuition, faulty though it may be, with regard to the circumstances of the day. In that telling, the National Recovery Act, with its cartels and deliberate stabilization of prices, was foolish and counterproductive. Henry Wallace’s AAA, with its controls on production and prices, foolishly anti-competitive (and, of course, Wallace’s policy must be completely unconnected with the sudden, steady increase in the rate of agricultural productivity growth across crops, which it brought about.) And, the Wagner Act — the horror of horrors!

The Right has a well-funded, well-coordinated, well-established effort to fashion propaganda out of faulty memory of the great depressions, The Great Depression, most of all, and they do not meet much opposition in the mainstream of the economics profession. Professional historians, like Eric, interested in economic history, form a thinly staffed corps to array against them.

I wish I had time to review what was written about Henry Wallace and the AAA. The Agricultural Adjustment Acts (1933, 1935, 1938) were a hugely important battlefront for the New Deal, featuring adverse Supreme Court rulings, profound changes to monetary policy as well as farm policy, and of the utmost importance to addressing significant structural problems in the U.S. economy. On its face, the AAAs appear to have put into place one of the most wildly successful industrial policies of the 20th century, but academic economists, across their limited ideological spectrum, routinely deny this.

“FDR as a student had no taste for theory or abstraction and that that remained true for the rest of his life”

Notoriously, neither did/do most Brits; the Germans find the English sadly illogical.

Re: Eric @ 15, historians rightly or wrongly seem to think that they understand Adams, Jefferson, and Wilson. Part of the problem with FDR, to me anyway, is the difficulty of understanding “what he was really like.” He was a strange, secret man. And a great president.

“If any memorial is erected to me, I know exactly what I should like it to be. I should like it to consist of a block about the size of this (putting his hand on his desk) and placed in the center of that green plot in front of the Archives Building. I don’t care what it is made of, whether limestone or granite or whatnot, but I want it plain without any ornamentation, with the simple carving, ‘In Memory of ____’.”
FDR (from Wikipedia)

I didn’t say FDR was either the creator of the union movement or a motive force for it. You make these kinds of strawman arguments frequently, rootless, and it’s a dishonest practice.

I do say that his benign attitude toward labor unions, particularly industrial unions, was a key factor in their success in raising wage rates during the Great Depression, against what would be, otherwise, some steep odds.

Not to be solipsistic after all these great comments, but in my post quoting rootless-e’s sentence, “The CIO had a little something to do with that” I should have italicized it to show they were not my words. (I sometimes have difficulty with the formatting here).

which, at least to me, puts way to much stress on FDR’s role and too little on the role of the CIO.

My secondary objection was to:
“Unions need a benign attitude in the civil authority to succeed. The hostility of previous Democratic Presidents — Grover Cleveland and Woodrow Wilson — had struck significant blows against the hopes of organized labor (even when Wilson acted within wartime control of the economy to raise wages). “

only in the sense that, as shown by the passage and signing of the Norris/Laguardia act, Unions had obviously achieved a certain degree of political power prior to Roosevelt’s election.

Having a chief executive who was reluctant to call out the army to break strikes was, I agree, a huge benefit.

Thank you Bruce Wilder for making the point that Henry Wallace did nothing except save the food supply from the “logic” of decline and “creative destruction.” Wallace’s Agricultural Administration was also at the forefront, through his boss FDR’s personal support, of restoring the soil in so many communities that had been destroyed by the early 1930s and had led to the Dust Bowl. Wallace deserves better for his AAA work, his tenure as VP and in the early days of the Cold War as a prophetic voice.

The best bio of FDR, however, remains Conrad Black’s long but written with bravado biography. Black analyzed FDR executive to executive and concluded that FDR was a “champion of freedom.” And let’s remember, Black was and is a neo-conservative and sadly, was hit for securities violations which took place while he was writing this magisterial book.